Over the past 12 hours, Bitcoin and Ethereum have risen by more than 6 percent in value, but some analysts are still not convinced about the short-term trend of the crypto market.
The quick recovery of Bitcoin and Ether, the native cryptocurrency of the Ethereum network, has led the general sentiment of the market to become more positive.
Ether, which plunged by nearly 20 percent on August 14, showed strong movements today, increasing from $250 to $280.
Ethereum Classic, Litecoin, Ripple, NEO, and other major cryptocurrencies also surged in value and volume on August 15, recording 5 to 10 percent gains in a relative short period.
However, the corrective rally recorded today was not as strong as investors expected it to be. In consideration of the steep drop in value the crypto market recorded over the past 72 hours, investors predicted a more strong bounce from previous levels. But, Bitcoin, Ether, and Bitcoin Cash, which recorded solid gains in the last 12 hours, have started to demonstrate a downward trend once again.
Willy Woo, a well respected cryptocurrency investor and analyst who predicted the price of Bitcoin to drop below the $6,000 mark since May of this year, recently said that the market will likely experience another drop before its next mid-term rally.
Woo specifically said that Bitcoin will likely test the $6,000 support level once again in the near future, even if Bitcoin recovers beyond the $7,000 mark and the market sees a convincing rebound.
“Leveraged short positions now near all time high. Anyone got a spare $35m in their trade account? Should be enough to trigger all those stops for a payday,” Woo said, referencing his previous statement made on August 13:
“The 3rd dead kitten. Fractally speaking, I’m framing this last down leg as an oscillation around the main move. The green line is just magic crayons for short range TAs to determine, the retest target and rate of decline are the things I’m watching. NVT only mildly supports this.”
Based on the analysis of Woo, a likely scenario for Bitcoin and the rest of the crypto market is to record another major drop in the near future, bottoming out at a lower range of prices, and demonstrating stability before initiating a proper mid-term rally.
The lack of momentum, volume, and stability in the market has decreased the probability of a mid-term rally in the near future, and as BitMEX CEO Arthur Hayes stated before, the market will not be able to support a huge spike in price with its current price trend.
More to that, the increasing dominance index of Bitcoin, the most dominant cryptocurrency in the market, shows the lack of confidence of investors in high-risk high-return investments, which generally means the market is unstable and hugely volatile.
It is possible that Bitcoin continues its corrective rally towards the $7,000 mark and records a strong bounce before the next fall, but it is also possible, if BTC fails to secure momentum in mid-$6,000, that it falls below $6,000 once again.
Featured image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:55 PM